Buy health insurance, or else?

December 05, 2007

By last count, some 47 million Americans don't have health insurance. Some of them can't afford it. Some can, but don't think they need it. Some will go bare for only a little while, until they find a new job.

To face a serious health condition without insurance is a frightening prospect. And when people face health emergencies, the costs often get passed on to the hospitals ... and eventually to taxpayers.

How to cover the uninsured is a hot question in the presidential campaign.

Most Republicans favor a private-market approach, with tax breaks to help uninsured individuals afford coverage. Sen. John McCain, to his credit, has provided the most detailed GOP proposal on how to contain health-care costs. Make no mistake -- cost containment is going to be key to any successful health-care plan.

Several of the Democratic candidates have rolled out expansive plans for government-assisted universal coverage. The Democrats' plans tend to be more alike than different. But they disagree -- loudly -- over one crucial concept: Should all Americans be forced to carry health insurance? And if they refuse, how do you force them?

Sen. Hillary Rodham Clinton says yes, everyone should be compelled to have coverage. She has made the so-called "individual mandate" the centerpiece of her health plan. She'd provide federal subsidies for some people but force wealthier people to pay their own way. She's not saying exactly how she'd enforce that edict.

Sen. Barack Obama says he would provide access to all but would require only that kids be covered, not adults. He says you can't force people to buy insurance because it is too expensive for many of them. For the past few weeks, Clinton and Obama have been arguing about whose universal plan is, well, more universal. They haven't been arguing over whose plan would be more expensive -- but they should be.

A requirement that all Americans have access to insurance runs the risk of health-care cost inflation. People who have insurance tend to spend more on health care, not less. A landmark Rand study several decades ago found that most people who paid directly for almost all of their own medical bills spent about 30 percent less on health care than those who had insurance picking up the tab. The kicker: It made little to no difference in the health of most of those people.

If you provide universal access, but don't mandate it, you make it more likely that healthy people won't pay into the health-care system. They won't buy coverage until they have to buy it -- when they get very sick. So costs, but not necessarily revenues, rise.

There's some real world evidence about the effectiveness and pitfalls of mandated coverage. It comes from Massachusetts, which now requires residents to buy health insurance. It subsidizes those who can't afford coverage and penalizes those who can but refuse. The plan was signed into law last year by then-Gov. Mitt Romney, now a GOP presidential candidate.

Enrollment has exceeded expectations in Massachusetts, topping 200,000 of the formerly uninsured, or nearly half the state's target. But state-subsidized insurance packages for low-income residents have been so popular that the program may bust its budget. That's a warning for those pols who promise to increase coverage while they cut health-care costs.

One reason Massachusetts may bust its budget: it forces insurers to offer a soup-to-nuts policy. That's expensive and projected to get even pricier next year. The high cost has prompted Massachusetts to exempt a large number of people from the "mandate."

The best way to whittle insurance costs is to allow insurers more flexibility to offer high-deductible, lower-premium coverage. Lower-priced policies that cover only catastrophic events could lure more young, relatively healthy people to buy in.

Right now, about a third of the uninsured could afford coverage, federal statistics suggest. But they don't buy it. Some of them are the so-called "young invincibles," the healthy and young who don't think they need it. What about all those young invincibles in Massachusetts? Many apparently aren't yet persuaded to sign up. The penalties so far are too small.

There's a lure to universal health coverage, a lure the Democratic candidates, at least, can't resist. It is, for everyone, the goal. But an answer on health care that prompts rampant cost inflation will only create new problems -- and likely keep some people from receiving care.

So, to the candidates: take care in what you promise. And be real about the costs.

What do you think?

Should the government guarantee health-care coverage for all people?

Why or why not?

E-mail us by 2 p.m. Wednesday at ctc-response@tribune.com with "healthcare" in the subject line. Include your name, hometown and contact information.